Nigeria Eurobonds Rally as Foreign Investors Eye Attractive Yield
Amidst a plan to raise $2.2 billion in external borrowing, Nigeria’s sovereign Eurobond has continued to attract foreign portfolio investors (FPIs) in the international market.
The renewed buying interest by the offshore investors followed mild selloffs triggered by uncertainties spooked by consumer price index data for October.
After Nigeria’s statistics office announced the inflation rate climbed to 33.88% last week, offshore investors sold down their interest. The riskoff sentiment was not sustained, as the trading trend showed a bullish tendency that will persist.
Most global rating agencies believe that the monetary policy will hike rates at the policy committee meeting next week to further anchor Nigeria’s stubborn inflation condition.
The monetary policy tightening has persisted, causing the benchmark interest rate to be lifted to 27.25%. By consensus, analysts are projecting a 25–50 basis point interest rate hike next week. The rate hike expectation precedes Nigeria’s plan to borrow $2.2 billion approved by the Senate from the international market.
On Thursday, the Eurobonds market exhibited a positive theme, with buying interest noted, although it was less aggressive, particularly in Nigerian and Angolan papers. Consequently, the average mid-yield for Nigerian bonds fell by 8 bps, closing at 9.56%, according to AIICO Capital Limited.
Buying interest remained prevalent across the curve as portfolio investors leveraged on attractive yields in the market. Most of the day’s buying interests were seen in 30s, 31s, 47s, and 49s, TrustBanc Financial Group stated in a note.
Similarly, bullish sentiment was observed across the curve in Ghana, South Africa, and Angola papers. On the international front, U.S. unemployment benefits dropped unexpectedly to 213,000 last week, the lowest since April, signaling a robust job market.
This beat the median Bloomberg forecast of 220,000 claims. #Nigeria’s Eurobonds Rally as Foreign Investors Eye Attractive Yields FX Stability: CBN Sells 122.671m Dollars to 46 Authorised Dealers
